Amazon Opens Wallet, Starts Paying Taxes In European Countries

Leave it to the lawyers to find loopholes wherever they may exist. For Amazon and its legal advisers, that meant processing all European sales in Luxembourg, a comparatively low tax region that's been saving the online vendor a significant amount of money. It also drew the ire of European regulators, and in the midst of a series of probes into tax deals that companies like Amazon have struck with individual countries, the world's largest online shop has changed the way it pays taxes.

Instead of processing all sales in Luxembourg, Amazon on May 1 began booking revenue from retail sales in individual European countries, with local branches in the U.K., Germany, Italy, and Spain, according to a report in The Wall Street Journal. The move could me a much higher tax bill for Amazon, and it could also put pressure on other companies to follow suit.

Image Source: Flickr (Images Money)

The European Union began investigating Amazon's "cosmetic" tax scheme in January on the belief that going through Luxembourg might provide the site with an illegal and unfair advantage and run afoul of European law. Regulators have also been looking into several other firms, including Apple and Starbucks, to see if they're receiving special treatment.

Amazon didn't have much to say on the matter other than offering up a canned statement saying it regularly reviews its business structures. And even though Amazon recently altered its tax strategy in Europe, the EU could still fine the company if it finds any wrongdoing on Amazon's part.